The Impact of Asian Players on the Revenue of Their Teams and Major League Baseball

Home , Baseball in South Korea, Chan Ho Park, Kazuhiro Sasaki, Kingdome, Shigetoshi Hasegawa

University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange

Masters Theses Graduate School

12-2005

Ji-Ho Kim University of Tennessee, Knoxville

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Recommended Citation Kim, Ji-Ho, "The Impact of Asian Players on the Revenue of Their Teams and Major League Baseball. " Master's Thesis, University of Tennessee, 2005. https://trace.tennessee.edu/utk_gradthes/4585

This Thesis is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Masters Theses by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council:

I am submitting herewith a thesis written by Ji-Ho Kim entitled "The Impact of Asian Players on the Revenue of Their Teams and Major League Baseball." I have examined the final electronic copy of this thesis for form and content and recommend that it be accepted in partial fulfillment of the requirements for the degree of Master of Science, with a major in Sport Studies.

Dennie Kelley, Major Professor

We have read this thesis and recommend its acceptance:

Joy T. DeSensi, Gi-Yong Koo

Accepted for the Council: Carolyn R. Hodges

Vice Provost and Dean of the Graduate School

(Original signatures are on file with official studentecor r ds.) To the Graduate Council:

I am submitting herewith a thesis writtenby Ji-Ho Kim entitled ''The impact of Asian players on the revenue of their teams and Major League Baseball." I have examined the finalpaper copy of this thesis for form and content and recommendation that it be accepted in partial fulfillment of therequirements for the degree ·of Master of Science, with a major in SportStudies.

We have read this thesis and recommend its acceptance:

Accepted forthe Council:

Dean of Graduate Studies

THE IMPACT OF ASIAN PLAYERS ON THE REVENUE

OF THEIR TEAMS AND MAJOR LEAGUE BASEBALL

A Thesis Presented for the Master Of Science Degree The University Of Tennessee, Knoxville

Ji-Ho Kim

December 2005 11

This thesis is dedicated to my parents,

Sung-Ki Kim and Boon-Ok Lim

Who love and support me unconditionally.

Without their encouragement and trust,

I and this thesis would not exist.

And to my two brothers and one sister,

Ji-Yun Kim, Hyung-Chul Kim, and Hee-Jung Kim who willingly share all the memories, both good and bad, with me. iv Acknowledgements

I would like to express appreciation to all of people who helped me complete this study. First of all, to Dr. Dennie Kelley, thank you for your support and consideration on not only this research, but also as my advisor. I would not have been able to complete this

Master's degree without your countless support. To my other committee members, Dr.

Joy DeSensi and Dr. Gi-Yong Koo, thank you for helping me improve my work. Your effortsand support have helped me greatly during the time as a graduate student.

I would like to appreciate Seung-Yup Lim, Jong-II Choi and Adam Love. I believe that their help on this study was a crucial part of this research. I will miss times withthem in Knoxville.

Once again, I really appreciate all of people who helped me to complete this research. V

Abstract

The purpose of this study is to examine the impact of Asian players, especially those from South Korea and Japan, on revenue changes of the Seattle Mariners, Los

Angeles Dodgers and Major League Baseball (MLB).

To gather data, the directors of Asian baseball operations fromthe Seattle

Mariners, LA Dodgers and MLB were contacted via e-mail and telephone. In addition, two journalistsfrom the sports industry and two experts fromthe baseball industry were contacted via e-mail. Further, data showing MLB's and teams' revenue sources from

Japan and South Korea were collected fromseveral sports websites.

To investigate the impact of Asianplayers on their teams and on the MLB revenue change, this study focuseson answering the following three questions:a) Have there been any significantincreases in the revenue of MLB, the Seattle Mariners and Los

Angeles Dodgers after acquiring Asian players? b) What are the additional revenue sources that canbe realized by acquiring Asian players? c) Have Asian players had a positive cost-benefiteffect?

Descriptive analysis was used in interpreting the results of this study, and the results are shown by percentages, mean, tables, and figures. Further, comparison of collected secondary data shows the Seattle Mariners', the Los Angeles Dodgers' and

MLB's revenue changes afterobtaining Asian players.

The findings of the study show that obtaining Asian players was effective in increasing the two teams'and MLB's revenue. Additionally, revenue fromJapan was the most significant factor in this revenue increase. This study provides an opportunity to vi examine a new trend of the global sports industry and also can be a reference to MLB teams when they obtain Asian players. vu Table of Contents

Chapter 1-Introduction ...... 1 Statement of Purpose...... 2 Definition of Terms ...... 2 Assumptions ...... 3 Sigt1ificance of Study ...... 4

Chapter 2-Literature Review ...... 5 Major League Baseball Teams' Revenue Structure ...... 5 Major League Baseball Revenue Sharing System ...... 5 Asian Community in the U.S...... 6 Popularity and Background of Professional Baseball in South Korea and Japan ...... 8

Chapter 3-Methodology...... 9 Collection of Data ...... 9 Data Analysis ...... 10 Limitations ...... 10

Chapter 4-Results ...... 12 Research Question One...... 12 Research Question Two ...... 12 Research Question Three ...... 18

Chapter 5-Summary, Conclusions and Recommendations ...... 21 Summary...... 21 Conclusions ...... 22 Recommendations for Future Study ...... 24

List of References ...... 25

Appendices ...... 29 Appendix A Data Request E-mail...... 30 Appendix B The Seattle Mariners' Attendance from 1995 to 2005 ...... 31 Appendix C The Los Angeles Dodgers' Attendance from1999 to 2005 .....32

Vita ...... 33 viii List of Tables

Table Page 1. The Seattle Mariners Payroll forJapanese Players (2000-2005)...... 19

2. The LA Dodgers Payroll for Japanese/South Korean Players (1995-2005) ...... 20 lX

List of Figures

Figures Page 1. Number of MLB Players from South Korea/Japan...... 13

2. MLB's Total Revenue fromForeign Countries ...... 14

3. Major League Baseball BRFs from Japan ...... 15

4. Major League Baseball BRFs from South Korea ...... 15

5. MLB Licensees in Japan ...... 16

6. Sponsorship with Japanese Companies...... 17

7. Major League Baseball Salary Increases from 1990 to 2005 ...... 18

1 Chapter 1

Introduction

Professional athletes' salaries have increased in recent years, and the average salary of Major League Baseball (MLB) players is $2.6 million in 2005 (Associated

Press). In addition, "Approximately 53 to 55 percent of MLB teams' revenue goes to players' compensation at the major league level" (Zimballist 2003, p.127). To pay forthe high players' salaries and at the same time to make a profit, ticket prices have increased.

In this respect, attracting sports fans in foreign countries may be an effective way to increase revenues. For example, according to Major League Baseball (MLB.com, 2005a), a record 29.2 percent of the players on Opening Day rosters - the 25- man active rosters and disabled lists were born outside the United States. That is up from 27.3 percent last year. The 242 players were from 15 foreign countries and the territories of Puerto Rico and the Virgin Islands. In the last decade, based on the data from espn.com (2005), the number of Asian players has increased. The Asian community in the United States has a growing population with above income average is in America, and is considered an important consumer base in the market (Embrey, 2004). Over 20 Asian players came to

MLB during the last 10 years, and some of them are helping both their team revenue and standing significantly. Twenty-two of the 24 Asian players in the present MLB came from South Korea and Japan (espn.com, 2005). By obtaining the Asian players, the teams and MLB can expect new revenue sources through selling broadcasting rights and merchandizing products to South Korea and Japan and to Asians living in MLB cities.

Indeed, the teams in cities with large Asian communities may effectively market to motivate Asian baseball fans to att_end the games. However, despite a predicted positive 2 impact of Asian players on MLB and their franchise teams' revenue changes, there has not been any academic research on Asian players' economic impact on MLB teams. This study will be a tool to explore this new revenue source forMLB.

Statement of Purpose

The purpose of this study is to examine the impact of Asian Major League

Baseball players on their teams' and MLB 's revenue change. Since baseball is the most popular sport in South Korea and Japan, and the number of major leaguers from those countries has steadily increased, the study investigates how South Korean and Japanese players have affected their major league franchise revenue change. This study examines franchises in Los Angeles and Seattle, both of which are cities with large Asian communities. The Los Angeles (LA) Dodgers and Seattle Mariners had the largest number of Asian players from South Korea and Japan in MLB during the last decade.

Some of these players have played a crucial role in the improvement of their teams' standings. To examine the impact of Asian players on their teams and on MLB, the followingquestions are explored.

1. Have there been anysignificant increases in the revenue of the LA Dodgers and Seattle

Mariners teams afteracquiring Asian players?

2. What are the revenue sources that can be realized by acquiring Asian players?

3. Have Asian players had a positive cost-benefiteffect?

Definition of Terms

Major League Baseball

Major League Baseball (MLB) is the highest level of play in professionalbaseball in North America. More specifically, Major League Baseball (MLB) refers to the entity 3 that operates North America's two top leagues, the National Baseball League and the

American Baseball League, by means of a joint organizational structure, which has existed between them since 1920 (Wikipedia.org, 2005a).

25-Man Roster

Each Major League Baseball team maintains both a 25-man roster and a 40-man roster of players, year-round. The 25-man roster is the list of eligible players who may play in a game.

(Wikipedia.org, 2005b)

Broadcast Rights Fees

A term that refersto the feesMajor League Baseball receives forselling broadcasting rights forMLB games.

Licensing

The practice of MLB selling the rights to use MLB logos and authorizing manufacturersto produce their products with MLB logos.

Merchandising Products

Products, which have MLB logos, such as caps, bats, jerseys, and other products

Assumptions

This research began with an assumption that MLB teams, especially teams in cities with large Asian communities, can generate more revenue through acquiring Asian players. Due to the high populations of Korean and Japanese Americans in the western

United States, such as in Los Angeles and Seattle, Asian-Americans are considered to be a significantconsumer segment in the market. More revenue was expected fromJapanese sources since Japan has a larger market than South Korea. 4 Significanceof Study

The number of Asian players has been increasing in Major League Baseball in the last decade, especially those from South Korea and Japan. As a result of the increased number of Asian major league players, the MLB teams which have a large Asian community can expect to generate new, lucrative profits, such as selling broadcast rights fees and merchandise products to fans in those two countries. However, there has not been an in-depth study of the economic impact of Asian major leaguers on their franchise teams. Thus, investigating the impact of Asian players on teams' revenue change through this study will help MLB teams make decisions when they consider acquiring Asian players. Academically this study will be helpfulin understanding the global sports market through analyzinga new trend in the MLB. 5 Chapter 2

Literature Review

The purpose of this study was to examine the impact of Asian players on their franchises' and Major League Baseball's revenue change. The literature review consists of four parts that includes: a) Major League Baseball revenue structure, b) revenue sharing system, c) Asian American demographical data, and d) the popularity of professional baseball leagues in Japan and South Korea.

Major League Baseball Teams' Revenue Structure

According to Conventions, Sports & Leisure International(2004):

MLB franchisesgenerally have three primary revenue sources: national and local media (broadcasting), revenues generated through the playing facilities and shared revenues. A large portion of a MLB franchise'srevenue is generated through broadcasting, and while teams equally share in national broadcasting revenues (approximately $18.6 million per franchiseper season under the currentrights agreements), significantvariances in the level of local broadcasting revenues among teams has resulted in large disparities in the total revenue generated by teams. MLB franchisesderive local revenues through ticket sales, concessions and merchandise sales, parking fees, premium seating, advertising, naming rights and other such revenue streams,in addition to national revenues from sources such as national broadcast contracts, MLB properties, revenue sharing and other such sources ( Conventions, Sports & Leisure International,2004, p.21 ).

Major League Baseball Revenue Sharing System

According to Papas (2001 ), the MLB revenue-sharing formula requires each club to pay 20% of its total local receipts, net of stadium expenses, into a common pool. The local receipts consist of revenue from areas such as ticket sales, concessions and merchandise sales, parking fees, premium seating, and advertising, naming rights. Three- 6 quarters of the money in the pool is divided equally among all 30 clubs. The remaining

25% is shared only by clubs with below-average local revenues, distributed so that the lowest-revenue teams receive the most.

Asian Community in the U.S

According to Embrey (2004), even though the Asian-American population ballooned 72 percent from1990 to 2000, the Asian-American market has not been considered as a serious marketing attention due to all the focuson the Hispanic customer.

Embrey stated that as a result of the increase in the Asian-Americans, there is now, based on the 2002 U.S. Census data, approximately 12.Smillion Asian-American consumers. While that's still a comparatively small market to set sights on, it's a powerful one in terms of household income and purchase power. The immigration of Asians to the

United States is very different.The population that immigrated to the United States is more or less already very educated or in the process of completing their education or even moving on to getting their advanced degrees. This is a demographic that exhibits a lot of desirable consumer traits-- highhousehold income, higheducational attainment and high levels of entrepreneurship. (Embrey, 2004).

Additionally, according to Embrey based on the data in the 2000 U.S. Census,

Asian-Americans are also one of the wealthiest groups in this country with a household income of $70,221 for Asian and PacificIslanders. This figureis well above the average forthe Caucasian population ($61,237) and total population ($57,045). This wealth increases the segment's purchasing power and makes the Asian-American demographic an attractiveconsumer for the retail industry (Embrey, 2004). Cheng, President of New

York-Asia Link Consulting Group, is quoted in Embrey, (2004), as saying that Asian 7 Americans have one of the fastest-growingrates of buying power in the United States, second only to Hispanics. Cheng continued by explaining that the rate of buying power growthbetween 1990 and 2007 forthe Asian-American population is predicted to be 79 percent, as opposed to the total national rate of 40 percent. By 2007, Asian-Americans are anticipated to have $455 billion in total buying power. Further, based on the informationin Embrey's article (2004), population statistics support why teams in cities with an Asian community need to consider acquiring Asian players; the population is very concentrated in the United States, with more than 50 percent living in just three states -- California,New York and Hawaii. Coupled with that, nearly 60 percent of

Asian-Americans are in the top metropolitan cities, including Los Angeles (18.8 percent),

New York (15.2 percent), San Francisco (13.9 percent), Honolulu (6.9 percent) and

Chicago (4.2 percent). Additionally, over the past 10 years, every U.S. state has seen a growth in its Asian population of at least 33 percent, with some states seeing as high as

200 percent growth.Even though the actual numbers of Asian-Americans spread throughout the country is small, the point is that Asians are still growingat an extremely fast rate (Embrey, 2004). Further, the Census Bureau estimates that the Asian-American population will grow to 37.6 million individuals by theyear 2050, which will constitute approximately 9.3% of the nation's population.

According to Embrey (2004), the six largest Asian segments in the United States are Chinese (23 percent), Filipino (20 percent), Asian-Indian (16 percent), Vietnamese

(10 percent), Korean (10 percent), Japanese (9 percent) and other(12 percent). The

Chinesegroup has garnered most the interest in termsof Asian maiketing,partly because it isthe largest

Asiansubsegment in thecotmtry, and itbecause hasone of the longest histories in thecotmtry. 8 Popularity and Background of Professional Baseball in South Korea and Japan

Baseball is the most popular professional sport in South Korea and Japan (Web

Japan, 2002). In the case of the South Korean professional baseball league, the league consists of 8 teams, and each team has 133 games in a season. The league began in 1982, with average attendance of 5,995 and the popularity gradually increased until 1995, with average attendance of 10,727 per game (Korea Baseball Organization). After 1995, attendance began to decrease and resulted in an average attendance of 4,383 per game in

2004 (Korea Baseball Organization). However, still baseball has the biggest fan base compared to other sports in Korea. Japanese professional baseball has about 60 more years of history, launched in 1936. Japanese professional baseball consists of two leagues with each league comprised of 6 teams. Each team has 140 games in a season. The 2004 season average attendance per game was approximately 13,909 (Dion, 2004).

Additionally, players' average salaries for the 2005 season (except foreign players' salary) in the Korean league were approximately $62,000, and Japanese professional baseball league players had an average salary of$341,500 (Seoul News Paper 2005).

According to a survey in Japan 2002, Japanese professionalbaseball was the most popular sport in Japan, for the eighth year in row. Additionally, seven baseball players were ranked as the most popular athletes in Japan and fourof themplayed in the MLB

(Web-Japan, 2002). 9 Chapter 3

Methodology

The purpose of this study was to examine the impact of Asian major league baseball players on their teams' and Major League Baseball's revenue change. Chapter three has the followingsections: a) MLB revenue change fromJapan and South Korea, b)

The LA Dodgers and Seattle Mariners revenue change from Japan/South Korea, c)

Japanese and South Korea players' productivity based on their salaries.

Collection of Data

MLB Revenue Change from Japan/South Korea:

To gather data, the directors of Asian baseball operations from MLB were contacted via e-mail and telephone. In addition, two journalists from the sports industry and two experts from the baseball industry were contacted via e-mail. Information on the followingtopics were requested:

• Total MLB revenue including revenue from domestic and foreign countries

• Broadcasting Rights fees

• Merchandising

• Licensing

• Sponsorship from Asian companies

Further, data were gathered from several sports websites, business journals and the baseball business books.

The LA Dodgers and the Seattle Mariners Revenue Changes from Japan/South Korea:

Data regarding revenue of the LA Dodgers from 1994 to 2004 and Seattle

Mariners from 1999 to 2004 were requested. To gather data, the directors of Asian 10 baseball operations from the LA Dodgers and Seattle Mariners were contacted via e-mail and telephone. In addition, two journalists fromthe sports industry and two experts of the baseball industry were contacted via e-mail. The data request e-mails asked the following information:

• Merchandising

• Sponsorship from Asian companies

Cost-Benefit Effectof Asian Players:

Asian players' salaries in the Seattle Mariners and LA Dodgers were analyzed to determine their productivity. To show their productivity, Asian players' salaries were compared to players' average salaries both on the same teams and from MLB. Asian players' salaries with the LA Dodgers and Seattle Mariners, as well as average MLB salaries were collected fromusatoday.com and baseball-reference.com.

Data Analysis

In order to show the Asian players' impact of teams' and MLB's revenue change, descriptive analysis was used. The results of the study were indicated by the frequency of scores, percentages, tables, figures and mean. Comparison of secondary data regarding teams' and MLB' revenue from Japan and South Korea in season by season was used to cover the research questions. And, to examine the cost-benefit effect of Asian players, this study compared Asian players' salaries with MLB players' average salaries.

Limitations

This study only focuses on revenue change of the Los Angeles Dodgers and the

Seattle Mariners after obtaining Asian players because those two teams represent the largest Asian communities in America. Both of these two teams have successful Asian 11 players. Thus, the research may not be applicable to the impact of Asian players on teams' revenue changes that are located in cities with smaller Asian communities.

As many previous studies (Kamara. R, 2002) show, teams standings in the last season are the most crucial element to attract spectators to attend games, however, this study will not deal with how Asian players affect the increase in attendance since many variables are expected to clearlyexplain the increase or decrease in attendance. Although this research may not validate how Asian players affected attendance, we may assume if

Asian players performances are above average of other major league players, the Asian players helped increase attendance numbers.

Since teams and MLB financial data are confidential, this study was not able to show the exact amount of revenue changes of teams and Major League Baseball. 12 Chapter 4

Results

The purpose of this study is to examine the impact of Asian players on their teams' and Major League Baseball's revenue change. To gather the data, the directors of

Asian baseball operations from MLB, the LA Dodgers and Seattle Mariners were contacted via e-mail and telephone. In addition, two journalists of the sports industry and two experts of the baseball industry were contacted via e-mail. Results consisted of data from several sports business journals, books, and sports websites, such as Sports Business

Journal, ESPN.com, MLB.com, business of baseball.com, and baseball reference.com.

The data were used to explain the impact of Asian players on teams/ major league baseball's revenue change, and players' cost-benefiteffect based on their salaries.

Research Question One

Have there been any significant increases in the revenue of the Seattle

Mariners/LA Dodgers and the MLB after acquiring Asian players?

Research Question Two

What are the revenue sources that can be realized by acquiring Asian players?

To answer the above two questions, the number of Asian players, teams' and

MLB's revenue from foreign countries were gathered. The number of Asian players and

MLB's revenue from their countries has increased since Major League Baseball

International(MLBI) launched in 1987.

The number of Asian players from South Korean and Japan:

The number of Asianplayers fromSouth Korea/Japan, teams and MLB revenue data were collected for the last decade. For the last decade, the number of Asian players has 13

Number ofMLB Players fro m S.Korea/Japan (1994-2005)

25 -r------�------,...... ,..., 22 20

�... j15 +--��-----��-�--A-' �Jap an :::s 14 = -11-S.Korea -(: --iitr--Total }10 -+---�=

Figure 1. Number of MLB Players from South Korea/Japan Source: Based on data fromESPN .com increased, after Chan Ho Park, a South Korean player, arrived in MLB in the 1994 season, the number of Asian players reached 25, and 22 of them are from South Korea or Japan in the 2005 MLB season as shown in Figure 1. Additionally, several prospective young

Asian players are in the major league baseball farmsystem.

MLB revenue fromJapan/South Korea from 1997 to 2005 season:

MLB revenue from foreign countries has increased since Major League Baseball

International (MLBI) launched in 1987. Major League Baseball International increased its revenue from foreign countries 1000 percent from 1987 to 2003 season. The following

Figure 2 shows MLB's total revenue fromforei gn countries from 1989 to 2003. 14

MLB's Total Revenue fro m Foreign Countrie s

$120 $100 ....= $80 ....- = $60 $40 $20 $0 1989 2002 2003 Figure2. MLB's Total Revenue from Foreign Countries Source: Based onfrom data Rovell (2 002) andSports Business International (2004)

MLB Broadcasting Rights Fees from Japan and South Korea (BRFs):

The largest portion of revenue resources of MLB revenue from Japan/S.Korea is broadcasting rights fees (BRFs), and this revenue is equally distributed to each of the 30

MLB teams. Japan and South Korea's BRFs have soared in the last IO years as shown in

Figure 3 and 4. The BRFs from Japan have increased 300 percent and 4000 percent from

South Korea in this 10-year period. The total amount of BRFs from 1997 to 2005 seasons was approximately $215 million. The MLB has agreements regarding BRFs with broadcasting companies in these two countries that MLB and Dentsu (Japanese advertising company) agreedto terms on a five- year (2004-2008), $275 million deal for the rights to broadcast games in Japan, and in case of the agreement between the MLB and South Korean Broadcasting company, X-Sports, they agreed to terms on a four-year

(2005-2008), $48 million deal for the rights to broadcast games in South Korea. 15

Broadcasting Rights Fees fro m Japan (BRFs)

50 45 40 35 -0 -·- 30 ·- 25 � 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005

Figure 3. Major League Baseball BRFs fromJapan Source:Based on data fromSp orts Business Jo urnal (2004)

Broadcasting Rights Fees fromSouth Korea (BRFs)

14 12

0- ·-- 8 � 4

2 0 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure 4. Major League Baseball BRFs from South Korea Source: Based on data fromYun-Hap News (2005) 16

MLB Licensees in Japan

""'

70 1 ,------59______60 ll----,------� -.--�___,...... __,,...... ,....--=��-...... - -�...... _._4 0 � 5 � It--,.... ------"--...... __...... ,. 40 Licensees � I---,-,,-��,_.,..,� ...,._,.�-- I • I 30 I M � 20 �------...... "'""'-'-��----.--.-t 10 1--,-.,...._ __ _ . 6 - . ·.·.·· ·· i----...1.1 ___...... � '-� �...... __,,______.a;." ' ____,;ii...... ;;i�--..-i 0 1 1998 2003

Figure 5. MLB Licensees in Japan Source: Based on data from Hong (2005)

MLB Sponsorship and Licensing fromJapan/South Korea Companies:

After some of the biggest baseball stars in Japan, such as Ichiro Suzuki and

Hideki Matsui, came to the MLB, the number of sponsorships and licensees has increased as shown in Figure 5. It is not possible to determine a cause and effect relationship, but the evidence indicates a positive relationship. In 2003, MLB had 18 sponsors and 55 licensees in Japan. MLB earned $60 million in revenue from Japan, and it was more than all revenue from other countries in the world (Sport Business Jo urnal, 2004). MLB reached its first agreement regarding sponsorship with a South Korean company, the

Oriental Brewery, in the 2004 season. In the case of MLB licensing in South Korea, only one company, F&F, was found as MLB's apparel licensee in Korea from1997 to 2004

(mlb.com, 2005b).

The Seattle Mariners Revenue from Japan/South Korea:

Sponsorship with Japanese companies:

The Seattle Mariners had 21 sponsorships with Japanese companies from 2001 to 17

Sponsorship with Japanes Companies

7 6 5 ; 4 g_ 3

2001 2002 2003 2004 2005

Figure 6. Sponsorship with Japanese Companies Source: Basedon dataftom MLB.com, Sports Busines.5 Research Netwotk (2005) andRovell (2002)

2005 season as shownin Figure 6. The:financial agreementswere not releasedfor publicati on.

The Los Angeles Dodger Revenue from Japan/South Korea:

Sponsorship data fromany Japanese/South Korean companies were not available forthe 1997 to 2005 season.

Additional revenue resource, which is realized by obtaining Asian players: When Chan Ho Park, a Korean pitcher, played as a starter, the LA Dodgers had an additional attendanceof 5,000 per game during the 1997 to 2001 seasons. The expenditure per person in the stadium during these seasons was approximately $15-$20.

Thus, it is estimated that the LA Dodgers generated an additional $80,000-$100,000 per game and $900,000-$1.5 million per year through Chan Ho Park's starting (Lee, 2002)

MLB's Exposure in South Korea and Japan afterobtaining Asian players:

According to Rovell (2002), TV rating for MLB games has increased in South 18 Korea and Japan. The 2001 World Series was watched by more than 100 million people in 224 countries and territories around the world. Korea and Japan viewers made up by

301 percent from the 2000 World Series. That's despite the fact that Kim was the years ago, baseball fansin Japan once could watch 50 major-league games over the course of a season. Now, with 11 Japanese players on the rosters of seven major-league teams,

Japanese viewers can catch about 350 games a season. With three Japanese players on their roster this season, all 81 of the Mariners' home games are broadcast on high definition television in Japan.

Research Question Three

Have Asian players had a positive cost-benefit effect?

A Positive Cost-BenefitEff ect of Asian Players

The average salary of MLB players has increased over 400 percent from 1990 to

2005 season as shown in Figure 7, and the average salary of MLB players has reached

$2.6 million (AssociatedPres.s, 2005).

MLB SalaryIn creases From 1990 to 2005

$300 $250 � $200 0= ;= $150 I 11salaryI """'= $50

$0 �--_,...--____..___....i---i�-....,__.____.____...... u...... - .,..-J..-...,;.a._-f 1990-91 1993-94 1997-98 1999-00 2002-03 2005

Figure 7. Major League Baseball Salary Increases from 1990 to 2005 Source: Basedon dataAssociated� furn Howard, DR andCrompton, JL. (2004)League salary increases1990-91 furn to 2002-03. Financing.sportp.40 (2°1ed.) 19 Table 1. The Seattle Mariners' Payroll forJapanese Players (2000-2005)

Ichiro Suzuki Kazuhiro Sasaki Shigetoshi Hasegawa Average Players' Salaries 2000 $4,000,000 $1,480,000 2001 $5,670,000 $4,670,000 $1,500,000 $1,930,000 2002 $3,700,000 $5,070,000 $1,500,000 $3,330,000 2003 $4,670,000 $8,000,000 $1,800,000 $3,150,000 2004 $6,500,000 $2,750,000 $2,660,000 2005 $12,500,000 $3,230,000 $800,000 Total $33,030,000 $21 ,740,000 $13,940,000

Source: Based on data fromUSA TO DAY.com (2005a)

Asian players' salaries were investigated to examine the cost-benefit of Asian players based on their salaries. Only full time Asian players' salaries in the Seattle

Mariners and LA Dodgers were investigated to show their cost-benefit. The Seattle

Mariners had three Japanese players during the last 6 seasons and now have two players.

The Los Angeles Dodgers had two Korean players from 1995 to 2005 season and now have one player. The most popular Korean pitcher, Chan Ho Park played for the LA

Dodgers as a full time player from 1997 to 2001. In the case of the Seattle Mariners, Ichiro

Suzuki,whocan repre:entJapanese baseball was paid $6.6million annually for fiveyears. The

LA Dodgers paid Chan Ho Park a $3.4 million average salary for 5years. Both players were paid above average MLB salary and performed a crucial role in their teams. Ichiro

Suzuki has performed very successfullysince he came in the MLB. He was an All-Star in each of his seasons in the MLB and the 2001 American League MVP. Chan-Ho Park also played well for the LA Dodgers from 1997 to 2001 seasons. He averaged 15 wins per season with the LA Dodgers and was an All-Star in the 2001 season. Table 1 and 2 show the Seattle Mariners' and LA Dodgers' payroll for Japanese and South Korean players. 20 Table2. The LA Dodgers Payroll for Japanese/South Korean Players (1995-2005)

Year Chan Ho Park Hee Seop Choi Hideo Nomo Kazuhisa Ishii Average Players' Salaries 1995 $2,109,000 $287,500 1996 $600,000 $5 12,500 1997 $270,000 $900,000 $535,000 1998 $700,000 $2,800,000 $650,000 1999 $2,300,000 $1,050,000 2000 $3,850,000 $1,400,000 2001 $9,900,000 $1,725,000 2002 $4,500,000 $900,000 $1,950,000 2003 $7,750,000 $2,575,000 $2,605,834 2004 $9,000,000 $2,975,000 $1,500,000 2005 $351,500 $650,000 Total $17,020,000 $351,500 $27,659,000 $6,450,000

Source: Based on data fromUSATODAY. com (2005b) 21 Chapter 5

Summary, Conclusions and Recommendations

Summary

The purpose of this study is to examine the impact of Asian Maj or League

Baseball players on their teams' revenue increase. The study examined the impact of

Asian players on the Major League Baseball and their teams' revenue change through investigating revenue resources from South Korea/Japan, such as broadcasting rights fees, licensing, merchandising, and sponsorship with Asian companies. This study will be helpful to understand the new trend of the global sports industry, especially in baseball.

The study may be used as a reference point for MLB teams when decisions are made regarding obtaining Asian players.

This study answered the followingtwo questions:

1. Have there been any significant increases in the revenue of these two teams after acquiring Asian players?

2. What are the revenue sources that can be realized by acquiring Asian players?

3. Have Asian players had a positive cost-benefiteffect?

To gather data, the directors of Asian baseball operations from MLB, the LA

Dodgers and Seattle Mariners were contacted via e-mail and telephone. In addition, two journalists from the sports industry and two experts from the baseball industry were contacted via e-mail. However, this study was able to be completed with data from several baseball business websites, sports business websites, and texts that contains specific information related to the topic. Descriptive analysis was used to show the results of the study by frequency of scores, percentages, and mean. 22 Conclusions

It was evident that Asian players are effective in increasing team and MLB revenue. After the 1996 season, the number of Asian players has increased. There were two Asian players in the 1996 season, and this number has increased to 22 in the 2005 season. At the same time, there were significant increases in MLB revenue from

Japan/South Korea (Rovell 2002). The main revenue resources of teams and the MLB from Japan and South Korea were broadcasting rights fees, sponsorship and licensing.

The biggest portion of revenue from theses two countries was from broadcasting rights fees. The broadcasting rights fees in Japan and South Korea have increased 300 percent and 4000 percent from the 1997 season to the 2005 season, and the MLB is expected to earn over $204 million through broadcasting rights fees for the 2006 through 2009 seasons from Japan/South Korea. In case of sponsorship with Japanese and South Korean companies, only MLB and the Seattle Mariners had agreements with Japanese companies, and the number of sponsorship has increased with the increasing number of Japanese players.

Even though this study cannot specifically represent the impact of Asian players on their teams and MLB revenue change, overall, this study was able to show the significant impact of Asian players on their teams and major league baseball's revenue increase through the Seattle Mariners, Los Angeles Dodgers, and MLB revenue from

Japan and South Korea. In the case of revenue resource broadcasting rights fees,

Licensing, Merchandising and sponsorship between the MLBI and Japan/South Korea is distributed to all MLB teams. However, teams' sponsorship revenues are not shared with other teams, thus obtaining Asian star players means that the team can generate additional 23 revenue compared to teams, which do not have Asian players. Additionally, as the LA

Dodgers' increasing attendance shows when Chan-Ho Park was scheduled to pitch, the team can expect more attendance, and it means additional local revenue, which is not available to teams without Asian players. In the case of Asian players' cost-benefiteffect, they were very effective in increasing the revenue of both their team and MLB, and

Japanese players were more effectivein increasing revenue. Over 75% of MLBI revenue was from Japan and South Korea, and 65% of MLBI revenue in 2004 season was from

Japan. The revenue from Japan and South Korea has exactly grown with the increasing number of Asian players during the last decade. However there were some differences between Japanese and South Korean players. All of Japanese players came to the MLB with successfulprofessional career in Japan, but only one Korean player had professional experience in South Korea. For instance, Ichiro Suzuki, who plays for the Seattle

Mariners was a profile player in Japan, and his debut in the MLB ignited the popularity of the MLB in Japan.

Since these teams' policies do not allow sharing of their specific revenue resources, it was impossible to gather specific data to validate these two teams' exact revenue, such as sponsorship and merchandising from South Korea/Japan.

Based on the findingsof this study, it is recommended by the authorthat a) Teams and MLB need to consider marketing to other Asian countries to increase their revenue, such as China and Taiwan. Further obtaining Asian players can be effectiveway to attract

Asian fansin both Asia andU. S., and b) Teams need to recognize the additional revenue resource from Asian players, and also should consider how to keep MLB popularity in

Asia. 24 Recommendations for Future Study

The results of this study formthe basis for the following recommendations:

1. Asian major league baseball players are huge stars in their countries, thus after they moved to MLB, many Korean/Japanese baseball fans and media pay attention to their respective players in MLB. In this respect, it will be necessary to study the impact of

Asian players on their countries' professional baseball leagues' popularity and teams ' revenue change.

2. Future studies need to investigate the impact of Asian players on teams in cities without large Asian communities in America

3. It is important to study how a large Asian community size is a minimum size to generate certain additional revenue through obtaining Asian players. 25

List of References 26 List of References

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Appendices 30 Appendix A

Data Request E-mail

September 27, 2005

Dear Director:

Hello, I am a graduate student in the University of Tennessee Sport Management program, and for my thesis, I am examining the impact of Asian players on their teams' revenue. I am contacting you to gather data concerningrevenue resources (1994 to 2004) from South Korea and Japan. Specifically, I am asking you for data about areas, such as broadcasting rights, merchandising, licensing, and sponsorship. Further, if you have other information about additional revenue resources from these two countries, please share that as well. Your assistance is the most important part to complete this study, and I appreciate your help.

The purpose of this study is to examine the impact of Asian players on their teams' and MLB 's revenue change. If you would like, I can provide you with much more informationabout this study.

To summarizing, I am asking for the following information from 1994 to 2004:

Total MLB revenue including revenue fromdomestic and foreigncountries Broadcasting Rightsfees Merchandising Licensing Sponsorship from Asian companies Other revenue source from Japan/Korea

* My research due is by Oct 31, thus if you can provide the data by Oct 10, it will be very helpful to complete the research.

Many thanks are owed to you for your assistance in this study. I know that you have a busy schedule, but I feel the result of this study can also be beneficial to MLB. After I complete my research, I will be glad to share my findingswith MLB. Thank you again for your help.

P.S: I have attached detailed informationabout this study.

Sincerely,

JIHO KIM 31 Appendix-B

The Seattle Mariners' Attendance from 1999 to 2005

Year League Record Finish Stadium Attendance Attend/G 2005 ALWest 69-93 4 Safeco Field 2,725,459 33,648 (ballparks.com) 2004 ALWest 63-99 4 Safeco Field 2,940,731 35,863 (ballparks.com) 2003 ALWest 93-69 2 Safeco Field 3,268,509 40,352 (ballparks.com) 2002 ALWest 93-69 3 Safeco Field 3,542,938 43,740 (ballparks.com) 2001 ALWest 116-46 DIV,1 SafecoField 3,507,326 43,300 (ballparks.com) 2000 ALWest 91-71 WC,2 SafecoField 2,914,624 35,983 (ballparks.com) 1999 ALWest 79-83 3 Kingdome / Safeco Field 2,916,346 36,004 1998 ALWest 76-85 3 Kingdome 2,651,511 32,735 (ballparks.com)

Source: based on baseball-reference.com(2005a) 32 Appendix-C

The Los Angeles Do�gers' Attendance from 1995 to 2005

Year League Record Finish Stadium Attendance Attend/G 2005 NLWest 71-91 4 Dodger Stadiwn 3,603,646 44,489 (ballparks.com) 2004 NLWest 93-69 DIV,1 Dodger Stadiwn 3,488,283 43,065 (ballparks.com) 2003 NLWest 85-77 2 Dodger Stadiwn 3,138,626 38,748 (ballparks.com) 2002 NLWest 92-70 3 Dodger Stadiwn 3,131,255 38,657 (ballparks.com) 2001 NL West 86-76 3 Dodger Stadiwn 3,017,143 37,249 (ballparks.com) 2000 NLWest 86-76 2 Dodger Stadiwn 2,880,242 35,559 (ballparks.com) 1999 NL West 77-85 3 Dodger Stadiwn 3,095,346 38,214 (ballparks.com) 1998 NLWest 83-79 3 Dodger Stadiwn 3,089,222 38,139 (ballparks.com) 1997 NLWest 88-74 2 Dodger Stadiwn 3,319,504 40,982 (ballparks.com) 1996 NLWest 90-72 WC,2 Dodger Stadiwn 3,188,454 39,364 (ballparks.com) 1995 NLWest 78-66 DIV,1 Dodger Stadiwn 2,766,251 38,420 (ballparks.com)

Source: based on data from baseball-reference.com (2005b) 33 Vita

Ji-Ho Kim was born in Busan, South Korea, on October 31, 1977. He graduated from Dong-Rae High School in 1996, having played on the high school's baseball team forthree years. He went on to attend Kyung-Sung University in Busan and received two scholarships for academic performance. After serving in the Korean military for two years, Kim returnedto Kyung-Sung University, and graduatedin 2003 with a Bachelor of

Science in physical education. In the fall of 2004, he began working on his Master's degree at the University of Tennessee, Knoxville, in the Sport Management program. He also worked as an intern for the 2005 Knoxville Open golf tournament, and was a member of Partners in Sports. 76952"u36 dJ6 ('J· 03/08/HG HAR '